REO for the 1st Time Home Buyer

Congratulations on being ready to purchase your first home.  You probably could not have picked a better time.  Chances are that 3 years ago you were wishing that you were in a position to own a home.  Now that you are ready you might be hearing a large amount of conflicting advice.  Buy now, don’t buy now, it seems like everyone has an opinion and they are all conflicting.
 
Hopefully I can be the voice of reason in the cacophony of real estate predictions.  Here is the common sense guideline that really gets to the bottom line.  Value is value.  What does that mean? Markets are going to fluctuate, they always have and they most certainly always will.  When you own something of value you can survive any market.  It’s important to look at cost, but always remember to factor in value.
 
 If you are a first time home buyer and want to score a great bargain with high value then you certainly want to take a look at what the REO market has to offer. Give me a call and let me show you the value that is available to you.

REOs on the Rise!

ForeclosureS.com, one of the most recognized authorities in foreclosure statistics is reporting that REOs are up more than 70% in the first quarter of 2008. This number comes as no surprise to those of in the real estate business.  We expect for the number of REOs to rise over the next few months as more and more of the ARM loans reset and home owners are unable to meet the new adjusted mortgage payment, refinance their homes or sell the home quickly for an equitable rate. 
 
This large amount of REO property entering the market is potentially a once in a lifetime opportunity for investors who are looking to make a long term investment in the real estate market.  If you are interested in positioning yourself with valued real estate for bargain prices you need to take a look at what the REO market has to offer. 
 
In all areas of real estate it is important to have the right professional representing your interests; this is especially true in the REO market.  Banks and lenders are reticent to release their property holdings list to the public.  If you aren’t working with the proper professional who has access to this inside information you can lose valuable time and information.  We are the leaders in the Los Angeles REO market, contact our office and ensure that you are working with the highest caliber professionals in the business.
 

Next up: Which foreclosure property is the best buy when there are so many foreclosed homes in the area you want to live in.

Tying into our last article about “Foreclosure logic”, here are some tips when you set your sights on a specific community of homes.

 

Pay close attention to your surroundings. Is there traffic in the morning and /or evening that wind its way past certain homes as a shortcut to the freeway or major thru fare?  Are there some homes in the tract that are on smaller lots or have only a carport vs. an enclosed garage?  Are some homes protected from thru traffic because they are on a cul de sac? Do some homes back up to commercial buildings?  Do some properties have an alley where others have no access (trash cans in the rear, out of sight vs. in the front yard?  Are there restrictive homeowners rules that prohibit RV’s and even cars from being parked out in front of the homes?

 

These are just a sample of fact finding questions you should ask in determining long term value. Remember in the biggest picture you are “buying this house for what the next buyer will want”.  Sound confusing?  We will answer this next on Lancelot Blog .

 

 

Foreclosure Logic

It is important when searching for a home to know that there is always a reason why a property went “REO”.  The first question I ask myself is “Why did these people just walk away from this home?” 

Many times the answer is obvious. The owners lost their job, or an illness, or divorce.  Other times the answer is subtle. The property is on a busy corner, or there is commercial in close proximity. When this is the case the owners make an “executive decision” to vacate, as the overall neighborhood is declining in value.

 

We are witnessing this in communities throughout the U.S. right now. Recently there was a front page article about a tract in Denver just south of the airport area. Blocks of homes are in foreclosure. Where people have little or no equity and have to pay a mortgage, property taxes and insurance, they cannot justify the expense, so they pack up and vacate. These same folks then rent in the same neighborhood for 50% of what they were paying for home ownership down the street. Example: Rent is $1,100, where principal is $1,860, property tax $240, insurance $95, and equals $2195!

REO: The Hot Investment Opportunity of the Decade

Why are REOs so hot right now?  The simplest answer is that there are so many of them. With a record number of homes entering foreclosure and record numbers of homes going on the auction block, it only stands to reason there would be a record number of REO properties.  As we discussed in the last blog REO means property that was foreclosed upon and did not successfully sell at auction.  The property has now reverted to the lender. 
 
Even in economically sound times there are REO properties. But in general a bank won’t have a large inventory of REO properties. They don’t want to have a large inventory of homes.  They aren’t in the real estate business and it actually reflects badly on the bank’s business to have a long list of bad debts.  Currently lenders are finding themselves with an increasing inventory of REOs.  The upkeep and maintenance alone on these properties is expensive and undesirable for the lenders.  They prefer to sell the property than to maintain it.  This creates a motivated seller.
 
Across America we are seeing a large number of REOs entering the market on a daily basis, with motivated lenders looking to sell to qualified buyers.  In some cases we are seeing REO property sold for record discounts at better than average interest rates.  If you are waiting to buy your first home or to further invest in the real estate market – don’t wait.  Let me show you what the REO market has to offer you.  You won’t be sorry.
 
 

Why REO? Why Now?

Chances are that some time in the last month some one has said REO to you, and they weren’t talking about the band from the eighties.  REO property, which stands for Real Estate Owned has been one of the best kept secrets of the real estate industry for numerous years.  Purchasing REO property wasn’t something the general public was even aware of.  Suddenly everybody’s talking about it.  What’s the big deal?  Why now?

I’m glad you asked. I’d be happy to tell you. 
 
Let’s start with a quick definition of what REO property is.  If a home owner falls behind in their mortgage payments the lender will start foreclosure proceedings.  If the homeowner is unable to get caught up on their mortgage payments the property will ultimately be offered at auction.  If the foreclosed home does not sell at auction it becomes REO – Real Estate Owned by the lender.  Once the bank/lender owns the property they will attempt to sell it to recoup their original investment.
 
You might be asking what’s the big advantage of buying a property that no one wanted at auction?  The first and most obvious reason is price; there is a sizable discount on REO property generally between 10% and 30% below market value.  Frequently a property won’t sell at auction because there is a sizable tax lien on the property that the highest bidder will be force to pay in addition to their winning bid.  With REO, any tax liens on the property are usually forgiven.  This can be a substantial savings over purchasing at auction. And when you buy REO you are capable of inspecting the property before you purchase, which is either difficult or impossible with auction foreclosures.
 

Is your interest peaked?  Check back for my next installment when I explain why REO property is the hottest opportunity of the decade.  To subscribe to the blog, click the RSS button.
 

The Best REO Advice

Every time I turn around I see another ad for a HOW TO book promising to teach the reader everything they need to know about buying REO and foreclosure property.  Then there are the endless ads for seminars offering to teach the same thing.  It’s mind boggling to me how many people are trying to make a buck these days off of educating the public about purchasing REO and foreclosure properties. Don’t get me wrong, I’m all about education, but some of these seminars cost thousands of dollars and at some point every seminar, every book that is written on the subject says, “Find a Real Estate Professional who specializes in REO and foreclosure property” or something to that effect.
 
I happen to be one of those real estate professionals who specializes in REO and foreclosure properties.  To anyone who is considering paying $29.95 for the newest book on the subject or $1,295 for a weekend seminar – consider saving your money.  My name is Lance Kettler, I’m with Kettler Financial.  Read my blog for free to learn more about buying REO property and the REO process.  And if you live in Southern California give me an opportunity to be your financial expert on buying REO property.  Take the money you save and invest it in real estate, you’ll be glad you did.